Federal Reserve officials expressed concerns over rising inflation following President Donald Trump’s early policy proposals, particularly new import tariffs. According to minutes from the Fed’s January 28-29 meeting, business leaders signaled plans to pass higher costs to consumers, fueling inflation worries.
Participants cited trade and immigration policy shifts, potential supply chain disruptions, and stronger consumer spending as inflation risks. While they remain hopeful for price stabilization, officials noted that uncertainty surrounding Trump’s agenda has reduced their confidence in economic forecasts.
Atlanta Fed President Raphael Bostic acknowledged that while 2025 initially appeared promising, uncertainty has clouded expectations. “The precision of that estimate has reduced somewhat,” he told Yahoo Finance.
Financial markets showed little reaction, with interest rate futures suggesting the Fed’s first rate cut of 2025 may not come until July. Some policymakers indicated they may delay cuts further until inflation trends become clearer.
Trump’s proposed 25% tariffs on Canada and Mexico, along with a U.S.-Mexico border lockdown, have already prompted the Fed to adjust growth and inflation forecasts. Meanwhile, concerns over the federal debt ceiling, which must be addressed by summer, may impact Fed policy.
Officials affirmed their commitment to a 2% inflation target and maximum employment, with a broader policy review expected to conclude by next summer.
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